Friedrich Vrwrk Grp U/Adr

Welcome, ladies and gentlemen, to the earnings call of Friedrich Vorwerk Group SE regarding the full year figures of 2025. The company's CEO, Torben Kleinfeld, and CFO, Tim Harmeiser, will guide you through the presentation and the figures shortly, followed by a Q&A session via audio line and chat box. Having said this, Torben, the stage is yours.

Yeah, thank you very much, and also a warm welcome from my side. Welcome to the Friedrich Vorwerk earnings call 2025. I will, for everybody who is not in detail familiar with Friedrich Vorwerk, run you very quickly through the main topics of our company and then give you a short market update. about the latest developments in our main markets. Then I will hand over to Tim for, of course, the financial figures, which are key to this meeting here. And then I will give you a business update about our current projects we are running at the moment, at least the last ones. So, yeah, Friedrich Vorbeck has been active since founding in 1962, so with more than 60 years of experience in the business of engineering and constructing energy infrastructure here in Germany mainly. we can look back at numerous very successful projects in our highly attractive main market, which is natural gas transition, electricity transition, clean hydrogen transition, and, of course, adjacent opportunities where we sum up our activities in district heating, CO2 treatment and transport and treatment of biomethane. Today, we are operating from 14 locations within the north, mainly in the north of Germany, with more than 2,200 well-trained employees. And, yeah, due to... The energy transition, which is still going on here in Germany, we can look back at a very strong order intake already also in 2025. So, we were able to acquire projects in a total volume of almost a billion euros in 2025, which is an increase of 27% compared to the figures of the year 2024. Yeah, where do these order intake come from? Main customers here in our three markets are, of course, the large TSOs operating the energy transport grids, not only in Germany, but also in the middle of Europe. So it could be in terms of electricity transition companies called Tenet and Amprion in Germany. Looking at the market in clean hydrogen transition and natural gas transition, we have customers like Open Grid Europe, Gas Uni and others. But of course, you can also find petrochemical companies and cable manufacturers within our customers. Yeah, so what's the latest market update? First, I want to focus on the development of, since German government has agreed with the EU Commission to set up new power plants in Germany. These very flexible power plants are necessary to support the production of renewable energy, mainly driven by wind and solar farms. And in times you don't have wind and solar available you need to have an energy source which can be ramped up very quickly. So Germany is planning to install roughly 10 gigawatts of capacity in terms of gas driven power plants and that of course is an opportunity also for Friedrich Vorwerk Group both in pipeline construction to run new natural gas pipelines and later on also hydrogen pipelines towards these gas-fired power stations, but also we have a division in our plant construction department, which can supply the necessary fuel gas systems to supply those turbines delivered by companies like Siemens, GE or others. Other latest developments, since we have all heard that the hydrogen economy has been struggling a bit over the last month, German Parliament has passed a so-called Hydrogen Acceleration Act. Main part of that is of course to install the so-called core grid for hydrogen transport in Germany. which could be the nucleus to develop the hydrogen industry in Germany because it will cut off costs for transport of hydrogen when the core grid is available and consumers and also producers of hydrogen can be easily connected to this grid. but also they want to secure and make investments in hydrogen production here locally in Germany easier and more reliable for the investors. And, of course, all of our other businesses like Natural gas transition is also still ongoing since new LNG terminals are still developed on the coast of Germany. So, the Bundesnet Agentur has just published the first draft of the new grid development plan combining the investments in natural gas grid development and hydrogen grid development. And this plan looks out to the year 2035 with still investments in the natural gas grid of roughly 3 billion euros. And they also found out that probably developing the core grid for hydrogen will be more costly than predicted two years ago. So the revised plan for setting up the hydrogen core grid roughly sketches out investments of 25 billion euros instead of 20 billion, which was estimated before. So also here in the market of

natural gas and hydrogen huge potential for our company's group and therefore i would like to hand over to tim for last year's financial figures thanks a lot tom and also one welcome everyone from my side today's earnings call overall 2025 was a fantastic year for friedrich forwerk we achieved record-breaking results across all KPIs, successfully completed two acquisitions, secured numerous new major projects, and last but not least, we launched our proprietary welding robot in collaboration with our subsidiary 5CTech. Therefore, I'm very pleased to now present these strong results in detail. In terms of revenue, we've steadily increased over the course of the financial year and delivered a fantastic final quarter which, despite the seasonal nature of the business, nearly matched the strong performance of Q3. Overall, we benefited from favorable weather conditions in fiscal year 2025, not only in Q4, but especially in the first quarter, when we were able to resume work after a short winter break on many projects as early as mid-January. This point I would also like to briefly note that the first quarter does not always benefit from good weather conditions. This year, for example, in 2026, we've seen a harsher winter again after a long time, with plenty of ice and snow, particularly in northern Germany, resulting in equational production stoppages, even in February. However, depending on weather conditions in the next quarter, that are more relevant in terms of revenue and earnings, we expect to be able to offset at least parts of this effect over the course of the year. For the full year 2025, we generated revenue of €704 million, representing a remarkable 41% increase over the previous year. This was primarily due to our continued success in recruiting new employees, which led to a 15% increase in the average number of employees, as well as an increase in productive hours per employee, higher equipment utilization, and of course, some pricing effects. The electricity segment share of revenue has continued to rise, now standing at 52%, making it the primary driver of growth in 2025. While this is largely attributable to A North, we are simultaneously working on several medium-sized projects in this segment, such as Bowden 6, the Biltrom HD project, and several converter stations as well. Two-thirds of the current order backlog is attributable to this segment, so continued growth is expected here. At the same time, we anticipate a significant growth momentum from the clean hydrogen segment, as larger sub-projects on the hydrogen core grid are also expected to be put out of tender in the foreseeable future. Furthermore, we expect additional growth in the adjacent opportunity segments in 2027 and the following years, due to the German government's special fund. The development of probability was particularly impressive in the fourth quarter, with an EBITDA margin of almost 29% and EBIT margin of almost 25%, even taking into account the dilutive effect of the cost plus fee contract in our major A North project. In addition to the favorable weather conditions already mentioned in Q4, our success in claim negotiations, which typically take place in the fourth quarter, was a key factor in the exceptionally high margin, along with higher earnings from joint ventures, which increased by nearly €10 million compared to the same quarter of the previous year. Accordingly, we also concluded the 2025 financial year as a whole, thanks to our high-quality order backlog and a flawless project execution, very successful. We increased the EBITDA margin by 7 percentage points, from 16.2% to 23.2%, and more than doubled EBIT from 59 million euros to 137 million euros. Despite the tremendous 40% growth, we still managed to further reduce trade working capital, which, along with the higher profitability, plays a significant role in improving the net cash position. As a result, we were able to increase net cash by more than €100 million compared to previous year, bringing it to €262 million at year's end. It should be noted, however, that the trade work in capital is always at its lowest level at the end of the year and rises as the construction season progresses. These swings between summer and winter can amount up to 80 or even 90 million Euro. With regards to capital allocation, our top priority remains investing in organic growth, specifically in the purchase of new pipe layers, drilling rigs, cranes and excavators, and of course our welding robots. We've budgeted approximately 50 million euro for this in 2026. Furthermore, we will certainly be open to pursuing a larger M&A deal again, provided we find the right target and of course at a reasonable price. And finally, we would like to share the company's success with shareholders in form of a significantly high dividend payout consisting of 70 euro cent base dividend and a 40 euro cent special dividend. Let's now take a look at the development of order intake. In addition to the conventional order intake figure, we've already introduced a new KPI last year, the total project volume acquired. This new KPI also includes the proportionate project volume from the joint ventures in which Vorwerk is involved. And therefore, in our opinion, provides a more transparent view of the actual order situation, regardless of the structure of the contract. The total project volume acquired rose by 29% to €991 million in 2025, while conventional order intake at €538 million is around 20% below previous year. The main reasons for this are, on the one hand, the shift in the order structure towards more joint ventures, especially in H1 2025, and on the other hand, already well-filled order book combined with a limited capacity of all resources. The order backlog, which corresponds to the conventional order intake figure declined, therefore slightly to 1 billion euro for the reasons stated before. We've learned from several investors that the communication regarding order intake and the contract structure is not yet clear enough. Therefore, we are currently working on reporting an order backlog KPI that includes our share of joint venture projects as well, starting with the Q1 report. I expect that this additional metric will provide a transparent picture for all shareholders by the end of the latest. Then based on our consistently high quality order backlog, we expect our growth trajectory to continue in 2026 with revenues in the range of 730 to 780 million euro. It should be noted that following two years of very high employee growth, we intend to slow down the expansion of our workforce somewhat in 2026 to give the organization and the administrative functions the opportunity to grow at the same pace, while simultaneously focusing our recruiting efforts on attracting senior construction and project managers. At the same time, revenue growth is somewhat slower in 2026 due to the higher proportion of joint ventures. This change in the project mix also means that we are now forecasting absolute EBITDA instead of EBITDA margin. specifically in the range of 160 to 180 million euros for 2026, as this number is unaffected by the order structure. This guidance also takes into account the slightly softer Q1 2026 due to the adverse weather conditions. With that, I'd like to turn it back to Tom for the business update.